Qualifying For a Home Loan  * Pre-Approval vs. Pre-Qualification *

The first step with your new home mortgage is to determine how much house one can afford.  If you can only afford a $1000 dollar monthly payment, I wound not recommend to purchase a $250,000 home.  The exception maybe if you are planning to put a large down payment.  Most financial planners recommend that your housing expenses, such as rent, mortgage payments, property insurance and property tax should not exceed 28% of your gross income.   

Once you have determined how much home you can afford GET PRE APPROVED.

There are very significant differences between prequalification and pre approval.

• Loan prequalification is a simple process. We prepare your basic information regarding your financial status and give you an amount for which you may qualify. This can be done strictly on a verbal level or electronically over the Internet.  The prequalified amount is based solely on the information you provide. In most states, the prequalification process is not thoroughly investigated and therefore may be unreliable.  

A prequalified buyer is only told that they might be approved for a certain amount.

• PRE APPROVED is a much more in-depth & investigated process.  We will take all information regarding your application & finances then perform an extensive check on your current financial status. This will ultimately give you the exact amount that you will be eligible for.  This will depend on what type of loan and terms one decides with.  Being pre approved lets the seller know that you have gone through an extensive financial background check and there should be no unexpected obstacles to buying the home. 

Being pre approved buyer is actually approved for a loan of a certain amount

The type of mortgage you apply for will depend on many factors, but the majority of that decision will be based on your ability to pay a monthly installment. Once you have determined what you can afford, the next step is to choose a mortgage plan.